Analyst Expectations
Analysts surveyed by FactSet foresee Warner Bros. Discovery reporting a loss of 8 cents per share alongside revenue totaling $10.34 billion. This marks an improvement from the previous year’s figures, where the company incurred a loss of 86 cents per share on revenue amounting to $11 billion.
Market Anticipation
Analysts Downgrade Warner Bros. Stock Outlook
In late January, Wells Fargo analyst Steven Cahall downgraded his rating of Warner Bros. to Equal Weight from Overweight. He expressed concerns that earnings before interest, taxes, depreciation, and amortization could decline due to the company’s experimentation with content licensing to other streaming services, impacting Max engagement.
Cahall pointed out the dilemma faced by Warner Bros. management in balancing direct-to-consumer scaling and deleveraging through licensing deals. His target stock price remains at $12.
Mixed Sentiments from Industry Analysts
Creutz emphasized the need for the industry to shift away from standalone DTC models towards a more integrated approach where content is bundled together to drive growth and sustainability.
Industry Shift Towards Joint Streaming Platforms
Recent plans by Warner Bros., ESPN (a Disney subsidiary), and Fox to collaborate on a sports-streaming platform signal a departure from standalone direct-to-consumer streaming. Yet, this joint venture is currently facing an antitrust lawsuit from competitor FuboTV.
Overall, the industry is at a crossroads, with analysts expressing conflicting views on Warner Bros.’s strategic choices and the broader shift towards integrated content models in the streaming landscape.
